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Super Fraud Checklist for Your Business

We recently had a client who experienced such a horrible case of embezzlement by one of their most trusted employees who stole over $500,000 from this client and their company. The “trusted” employee had worked for them for more than 10 years, so it was totally unexpected. It did serve as a valuable lesson that no matter where you are in your business and no matter your relationship with your employees, it is ALWAYS good to have guidelines and conduct check-ins to make sure nothing sketchy is going on behind your back.

Bridges’s Fraud Checklist
1. Develop a code of conduct which explicitly prohibits employees from committing fraud, having conflicts of interest or engaging in any other form of illegal or unethical behavior. Ensure that all your employees, vendors and customers get copies of it. Have key employees provide annual confirmation of their compliance.

2. Have a clear company policy on time and expense reporting.

3. Verify the credentials of all new vendors before they are authorized to supply the company.

4. Make sure all disbursements are properly approved.

5. Use direct deposit for payroll.

6. Require two signatures on checks over a certain amount.

7. Review the bank statements before anyone else does. Consider having them sent to your home address. Review cancelled checks (or copies) and match payee names with endorsements. Review invoices for any payees you don’t recognize.

8. Make sure bank statements are reconciled each month and that your accountant reviews the bookkeeper’s work periodically.

9. Make sure everyone takes their full allotted vacation time and be suspicious about anyone who appears to live beyond their means.

10. If something seems odd, whether it is a disbursement to an unfamiliar vendor or an unexpected expense, check it out and don’t accept a casual explanation.

Following these simple steps will catch 99% of all instances of employee fraud.

This entry was posted on Friday, January 5th, 2018 at 7:43 pm and is filed under Uncategorized.
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